The Marketing of Palm Oil in Indonesia: A Case Study

Alejandra Arias, Kieran Cottrill, Marcus DeSouto, Christian Kabbas & Matthew Nolting

MK 212(C): Consumer BehaviorGroup #5

PURPOSE Our purpose is to show that the main cultural problem in the marketing of palm oil in Indonesia is one of PERCEPTION

and EDUCATION, and to provide recommendations to remedy the issue.

MAIN CULTURAL PROBLEM Currently, Muslim krupuk manufacturers PERCEIVE the

unstirred and unheated palm oil as some type of animal fat, rendering it non-Halal.

TARGET MARKET We will target RURAL MUSLIM KRUPUK MANUFACTURERS

● To change the perception that our product is animal fat, we will aim to educate Muslim rural krupuk manufacturers

● Focus on a grassroots approach, with missionary sales

PRODUCT CONCEPT● EMAS is a palm oil that is just as RELIABLE as coconut oil. However, EMAS

Palm Oil does not have the noxious cooking fumes of coconut oil.● Emphasis on purity of product, and the quality of the krupuk it produces● Focus on luxurious gold color inspires perception of quality

PRODUCT ● EMAS - perception of gold, luxury, and purity● We will package EMAS Palm Oil in smaller, more convenient

15 kg cans● Clearly display “100% HALAL” on label● Emphasize that product must be stirred before use, include a stirrer with

every can● Offer a 10-day money back guarantee

PRICE● Ex-Factory Price: Rp. 6500/kg

○ 1 can = Rp. 97,500

● Delivered Price: Rp. 6700/kg○ 1 can = Rp. 100,500

● MSRP: Rp. 6950/kg○ 1 can = Rp. 104,250○ Print on cans

● Overcome idea that low price = low quality by providing ample information

PLACE ● We will utilize Muslim dealers who are NOT currently distributing coconut oil● This way we maintain the trust of the Muslim rural manufacturers, without

competing with the market share of coconut oil

PROMOTIONAL GOALS

● Create brand awareness via mass media that will reach 50% of the rural areas of Indonesia in 3 months

● We want half of the krupuk manufacturers to be supplied with our product within 6 months of introducing

MASS MEDIA PROMOTION● Radio

○ Run advertising campaigns throughout rural parts of Indonesia○ Ads will consist of an assurance that the product is 100% Halal. ○ Ads will feature testimonials from respected krupuk manufacturers.

● Newspapers○ Newspaper ads will penetrate the rural areas of Java, Sumatra, Kalimantan, Sulawesi, and

Bali○ Informative ads will assure that the product is of the land and 100% Halal○ Ads depict goldish oil sealed in a golden container, guaranteeing its quality & purity

SALES FORCE● Build a sales force of Muslims recruited from rural areas to reinforce that

EMAS is 100% Halal○ Trained to focus on building trust

● Focus on EDUCATING manufacturers about stirring and heating the product ● Sales force will stress RELIABILITY, PURITY and ODORLESS NATURE● Sales force will carry small sample sizes for distribution● Our sales force will be very experienced with the product and how to

manufacture the krupuk

RELATIVE ADVANTAGE

PRIOR

● Palm oil is originally perceived as a disadvantage as being non-Halal

HOW EMAS WILL INCREASE

● Emphasize that it’s the same, but better○ EMAS is entirely odorless○ The product is ⅓ less expensive

than competitor

THE MOST INFLUENTIAL IN THE DIFFUSION OF PALM OIL

Palm oil is the same as coconut oil in every respect, except in odor and price.

The relative advantage serves as stimulus discrimination.

COMPATIBILITY

PRIOR

● The product is perceived as non-Halal

● The market is dominated by coconut oil, so it’s what they’re used to

HOW EMAS WILL INCREASE

● EMAS will stress that their product is 100% Halal

● Emphasize comparable characteristics to coconut oil

SIMPLICITY

PRIOR

● Palm oil is perceived as easy to understand, though not correct understanding

● Palm oil is not perceived as easy to use due to it’s lard appearance

HOW EMAS WILL INCREASE

● Sales force will educate market on:○ What palm oil actually is○ Similarities between palm and

coconut oils○ Stirring and heating processes

OBSERVABILITY

PRIOR

● Palm oil had low observability due to lack of effective marketing

HOW EMAS WILL INCREASE

● Informative advertisements run on radio and in newspapers

● Knowledgeable sales force to demonstrate stirring and heating

TRIALABILITY

PRIOR

● Palm oil has very low trialability due to package size

HOW EMAS WILL INCREASE

● Sales force will be equipped with samples

● Product will be packaged in a smaller size and come with a stirrer

WORD OF MOUTH ● We aim to target early adopters because they are more oriented to the local

community● Early adopters are also more reliant on the norms and values of the

Indonesian culture

Word of Mouth through Product News

● Provide information about palm oil through advertisements that run on the radio and in newspapers

● These ads will provide information on the advances of palm oil compared to competitors ○ Less expensive and odorless

Word of Mouth through Advice Giving

● One major concern with our product is that consumers perceive it to be non-Halal because of its resemblance to animal fat when it is unstirred and unheated

● Sales force and early adopter leaders will advise krupuk manufacturers to heat and stir the palm oil before use

Word of Mouth through Personal Experience

● Offer opportunities for consumers to become familiar with the product through tent krupuk giveaways

● Provide testimonials to build trust and portray positive experiences with product (non-biased perspective)

Option A For Mr. BoseA) Handle the situation internally.

● Talk to a supervisor or a director regarding the issue and the concerns that this could affect the consumer and turn them away.

Option APros:

● It’s ethical: we are taking care of the product we are producing as well as our consumers that are buying it.

Cons:

● Supervisors might be slow to act. Give them three months to adjust the product or go to next options.

Option B For Mr. BoseB) Go to the media.

● Give an anonymous tip to the radio/newspapers telling them that the product is not leaving the bodies of our krupuk eating consumers.

Option BPros:

● The consumers will become aware of the flaw of the product and stop consuming it.

Cons:

● It places the EMAS brand in a negative light. It will be costly to fix the product as well as fixing the brand image of the product. Will need to issue an apology to the public.

Option C For Mr. BoseC) Go to our competitors

● Tell our competitors so that they can use the information to promote their own product.

Option CPros:

● Consumers stop eating the damaging product and find a substitute that will work for their cooking needs.

Cons:

● We are helping our competitor gain back their former consumers and destroying profits as well as brand image for EMAS.

Our Advice for Mr. Bose

Go with Option A: handle the situation internally. Make the issue known to the supervisor and fix the melting point of EMAS. By doing this, the product still gets purchased by its consumers and the image of EMAS isn’t ruined.

QUESTIONS?